Latest George Soros Holdings Offer a Glimpse into His Latest Investing View
Whatever one thinks about George Soros’ divisive social activist causes, it’s unquestioned that he remains a consistent and successful investment manager (IM). Many investors around the world keenly follow the latest George Soros holdings in hopes of incorporating his latest idea for their own portfolios. Ghosting the moves of a successful IM—be it Warren Buffett, Ray Daleo, or Soros—has become a popular strategy for longer-term investors hoping to beat the S&P 500.
George Soros’ net worth is currently $25.2 billion, a testament to the amount of performance-based compensation he’s received due to his stellar track record of investment performance. He was one of the original founders of the Quantum Fund, which, for a decade and a half, produced yearly compounded returns of 30%. He’s also achieved notoriety as the man who broke the Bank of England in 1992, when he risked $10.0 billion betting against the British pound. His speculation was ultimately correct, and generated a profit reported to be around $2.0 billion. (Source: “The Great Investors: George Soros,” Investopedia, last accessed March 3, 2017.)
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The latest George Soros stocks for 2017 provide the usual blend of balance and diversification one would expect. Consistency has been a George Soros trademark for over 40 years, and there’s little reason to think this will change in 2017. Regardless of what the market does, it’s safe to assume Soros Fund Management LLC is hedged to whatever the market throws its way. His Fund hasn’t thrived for four decades making one-way bets year after year.
One of the biggest observations we can make based on George Soros portfolio is that Soros has a bullish U.S. economy outlook for 2017. Among his Top 10 holdings by asset value include five broad index sector ETFs: the iShares Russell 2000 Index (ETF) (NYSE:IWM); the SPDR S&P 500 ETF Trust (NYSEARCA:SPY); The Industrial Select Sector SPDR Fund (NYSEARCA:XLI); the Financial Select Sector SPDR Fund (NYSEARCA:XLF); and the iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM). In short, it looks like Soros is betting heavily on Financials, mid-cap stocks, industrial stocks, and emerging markets.
As for individual stocks in George Soros holdings, by far his biggest position is with Liberty Broadband Corp (NASDAQ:LBRDK). Liberty Broadband is a holding company with principle stakes in several entities, most notably Charter Communications, Inc. (NASDAQ:CHTR) and subsidiary Skyhook. Charter is one of America’s largest cable services providers, offering a host of information and entertainment services throughout the nation. Skyhook is a worldwide leader in mobile positioning and contextual location intelligence solutions.
Top 10 George Soros Holdings By Value
| Company | Ticker | Shares | Value ($1000) |
| Liberty Broadband Corp | LBRDK | 8,322,777 | $616,468 |
| iShares Russell 2000 Index | IWN | 2,451,300 | $330,558 |
| Argo Group International Holdings, Ltd. | AGII | 11,917,157 | $123,700 |
| SPDR S&P 500 ETF Trust | SPY | 493,000 | $110,200 |
| TiVo Corp | TIVO | 3,891,279 | $81,328 |
| The Industrial Select Sector SPDR Fund | XLI | 1,250,000 | $77,775 |
| Caesars Acquisition Company | CACQ | 5,705,079 | $77,019 |
| Williams Companies Inc | WMB | 2,351,221 | $73,217 |
| Financial Select Sector SPDR Fund | XLF | 3,125,000 | $72,656 |
| iShares MSCI Emerging Markets Index | EEM | 1,800,000 | $63,018 |
(Source: George Soros Current Portfolio, GuruFocus)
Judging by the appreciation in price of many of his top positions, it appears George Soros’ holdings are doing quite well. Soros average price on top holding Liberty Broadband Corp (NASDAQ:LBRDK), for example, has an average price of $70.23 per share while the stock is currently trading at $85.71 per share. That’s an increase of 22% as of this writing. His seventh-biggest holding, Caesars Acquisition Company (NASDAQ:CACQ), has appreciated 19% to date from his average purchase price of $12.17 per share.
Many of the top George Soros holdings are actually diminishing in size, as his investment managers cycle out of high-performing stocks into newer holdings. Therefore, the true relevance to investors is what Soros is doing now, rather than what he did previously.
George Soros Stocks For 2017
With a few exceptions, George Soros’ newest holdings are basking in a sea of black ink. For investors prescient enough to take note and act, 2017 should likewise be off to a great start.
His top three positions, as gleaned from the latest available data, are Key Energy Services, Inc. (NYSE:KEG), InvenSense Inc (NYSE:INVN), and NewStar Financial Inc (NASDAQ:NEWS). Collectively, these positions have appreciated 99%, 44%, and six percent, respectively, versus average buy-in prices (as of March 1, 2017). In fact, only four of the Top 20 George Soros holdings (new buys) are currently underwater, ranging from a manageable three percent to 23%.
George Soros Holdings – Most Recent New Buys (2016-12-31)
| Ticker | Company | Change From Average Price | Current Shares |
| KEG | Key Energy Services, Inc. | 99% | 1,850,790 |
| INVN | InvenSense Inc. | 44% | 1,306,666Preview Changes |
| NEWS | NewStar Financial Inc | 6% | 1,107,683 |
| GDS | GDS Holdings Ltd – ADR | -18% | 761,201 |
| P | Pandora Media Inc | 0% | 601,400 |
| KSS | Kohl’s Corporation | -14% | 600,819 |
| FITB | Fifth Third Bancorp | 14% | 519,027 |
| DV | DeVry Education Group Inc | 20% | 500,200 |
| MXL | MaxLinear, Inc. | 26% | 478,972 |
| TWX | Time Warner Inc | 10% | 434,000 |
| FB | Facebook Inc | 10% | 353,686 |
| WFM | Whole Foods Market, Inc. | 2% | 327,800 |
| LW | Lamb Weston Holdings Inc | 16% | 292,799 |
| NOMD | Nomad Foods Limited Ordinary Shares | -3% | 206,356 |
| NXPI | NXP Semiconductors NV | 3% | 180,400 |
| BAC | Bank of America Corp | 28% | 179,000 |
| AIRG | Airgain Inc | -23% | 166,666 |
| PNC | PNC Financial Services Group Inc | 22% | 141,871 |
| W | Wayfair Inc | 5% | 135,500 |
| SERV | ServiceMaster Global Holdings Inc | 9% | 118,100 |
(Source: George Soros Current Portfolio, GuruFocus, February 14, 2017)
It was then that Soros reportedly became cautious on the market heading into the U.S. election. He reportedly placed significant bearish bets after the election of Donald Trump, losing nearly $1.0 billion in the subsequent rally. As a result, his main fund only gained about five percent on the year, significantly underperforming the S&P 500 (Source: “Soros Lost Nearly $1 Billion After Trump Election, WSJ Reports,” Bloomberg, January 12, 2017.) Judging by the early performance of new George Soros holdings, it’s safe to say 2017 is off to a great start. This must be especially welcome news after the pummelling Soros took to end 2016.
Time will tell whether this rare faux-pas is just a blip in the radar or indication the grand master is losing his touch. Early indications suggest the former.
Perhaps the biggest surprise pick from the above table is Time Warner Inc (NYSE:TWX). Investors may recall that on October 22, 2016, AT&T Inc. (NYSE:T) entered into a definitive agreement to purchase Time Warner Inc in a stock and cash agreement valued at $107.50 per share. The union would have created one of the world’s largest media companies, with extensive assets in broadband, mobile, entertainment and cable TV news services (Source: “AT&T to Acquire Time Warner,” AT&T Newsroom, October 22, 2016.)
With Donald Trump threatening to block the merger due to negative coverage he’s received from Time Warner subsidiaries Cable News Network (CNN) and Warner Brothers, Soros bought in anyway. This is somewhat perplexing because Soros and his Open Societies Foundation are ideologically aligned with these same media companies providing “biased” coverage against the President. Does Soros not believe Trump will act on his threats to block the merger, or does he think the media will tone down its coverage? Regardless of the mindset behind the pick, Soros has continued to purchase TWX shares into the mid $90s—and well after Trump’s election win.
With shares of TWX trading at post-2001 tech bubble highs of $98.21/share (as of February 28, 2017), Soros again appears to be on the right side of the trade.
Stock Market Outlook for 2017
Given his rich history of stock picking success, is it worth blindly following Soros picks? Why risk following one’s own market interpretation when proven gurus like Soros and his staff have been doing it for years? The answer depends on individual investment style.
For those diversified passive investors not into making stock market predictions, following an investment guru like Soros may be a decent idea. After all, his Investment Managers have undoubtedly thought about all the macro risks inherent to their portfolio construction. They have access to all the best research and non-public information. They have a rich tradition of success. It’s hard to imagine an individual investor having the resources to construct something better, if diversification (along with performance) is the goal.
However, as well all know, past performance is not necessarily indicative of future success.
For example, from humble beginnings (the fund started with less than $6.0 million in capital), Atticus Global became one of the world’s biggest funds. From its inception in 1995 to its closing in 2008, the fund booked compounded annual returns of 19.3% versus just 3.9% for the S&P 500. Few money managers performed better during this period.
However, the 2008 financial crisis brought all this to an abrupt end. The European arm of the fund declined a whopping 42.5% year-to-year for September 2008 and suffered further losses of between 25% and 32% in its two main hedge funds. In August 2009, founder Timothy Barakett called it quits, closing the fund for good. Thus a legendary fund was vanquished in the blink on an eye. (Source: “Atticus Global Fund Calls It Quits,” Business Insider, August 11, 2009.)
The moral of the story: you’re only as good as your latest trade. Every portfolio is at risk when a market calamity strikes. The indiscriminate collateral damage can ruin even the best hedged portfolio. And with market valuations stretched to historical limits and numerous trade and geopolitical risks dotting the landscape, investors best take heed.
Time will tell how strong Soros’ portfolio finishes this year. Like most investment managers in a raging bull market, he’s doing quite well. But should a market calamity take place, through a mean reversal from stretched valuations, or a disastrous turn of events regarding free trade, all bets are off the table. George Soros’ holdings are only as strong as the market advance that carries them.
In high times like this, we think this infamous quote by Gordon Gekko is particularly relevant: “Bulls make money. Bears make money. Pigs? They get slaughtered.”
